New York, NY (December 20, 2016) – Bluerock Residential Growth REIT, Inc. (NYSE MKT: BRG) (“BRG”, the “REIT” or the “Company”) announced today that it has acquired the 324-unit, multifamily Deerfield Apartments (“Deerfield”) in Austin, Texas. The Company acquired the property through a joint venture for a total purchase price of approximately $48.9 million, or roughly $151,000 per residential unit.
The acquisition is projected to yield a stabilized pro forma cap rate of approximately 6.5% on execution of the Company’s Value-Add upgrade strategy. This compares favorably to estimated market cap rates of 4.75% – 5.25% for comparable assets.
BRG invested 92.5% of the venture’s equity requirement, or approximately $15.3 million, with an affiliate of F&B Capital investing the balance for a 7.5% stake in the venture. The transaction was further capitalized with a senior loan in the amount of approximately $34.8 million.
Deerfield, which was built in 2001, features one-, two- and three-bedroom units averaging nearly 950 square feet. The property features a large clubhouse as well as a resort style two-tier swimming pool, poolside grill/lounge, 24-hour fitness center, and a fully equipped residential lounge.
Deerfield benefits from its proximity to I-35 and US Route 1, which provide easy access to downtown Austin. As the largest employment node in the area, Austin topped the “Fastest-Growing U.S. City” list from 2010 to 2014 and again in 2016. Job growth in Austin is three times the national average, with much of that momentum fueled by the relocation and expansion of tech companies, including Apple, GM, Google, Accenture and Oracle. The Austin market is expected to add more than 11,000 tech jobs over the next five years.
“We are very optimistic about the upside potential for Deerfield. Our ability to purchase the property at a favorable cost basis, coupled with strong demand and ample room for value-add improvement, gives us good reason to expect that the property will be a strong performer and a solid contributor to the REIT,” said Ramin Kamfar, Chairman and CEO of BRG.
About Bluerock Residential Growth REIT, Inc.
Bluerock Residential Growth REIT, Inc. (NYSE MKT: BRG) is a real estate investment trust that focuses on acquiring a diversified portfolio of Class A institutional-quality apartment properties in demographically attractive growth markets to appeal to the renter by choice. The Company’s objective is to generate value through off-market/relationship-based transactions and, at the asset level, through improvements to operations and properties. BRG generally invests with strategic regional partners, including some of the best-regarded, private owner-operators in the United States, making it possible to operate as a local sharpshooter in each of its markets while enhancing off-market sourcing capabilities. The Company is included in the Russell 2000 and Russell 3000 Indexes. BRG has elected to be taxed as a real estate investment trust (REIT) for U.S. federal income tax purposes. For more information, please visit our website at: www.bluerockresidential.com.
Forward Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. These forward-looking statements are based upon the Company’s present expectations, but these statements are not guaranteed to occur. Furthermore, the Company disclaims any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, of new information, data or methods, future events or other changes. Investors should not place undue reliance upon forward-looking statements. For further discussion of the factors that could affect outcomes, please refer to the risk factors set forth in Item 1A of the Company’s Annual Report on Form 10-K filed by the Company with the U.S. Securities and Exchange Commission (“SEC”) on February 24, 2016, and subsequent filings by the Company with the SEC. We claim the safe harbor protection for forward looking statements contained in the Private Securities Litigation Reform Act of 1995.